February 24, 2021
Company name:
Representative:

Inquiries:Tel:

ES-CON JAPAN Ltd.
Takatoshi Ito, President &Representative Director(TSE 1st Section, code: 8892)
Minoru Nakanishi,Senior Managing Director+81-3-6230-9308

Notice on Partial Revision of Performance-Based Stock Reward System for Directors
ES-CON JAPAN Ltd. (ES-CON JAPAN) announces that a decision was made to submit a proposal (the“Proposal”) on the partial revision of the performance-based stock reward system (the “System”) for ESCON JAPAN’s directors (excluding auditor directors, external directors, and non-executive directors)
introduced from fiscal 2015 to the 26th Regular General Meeting of Shareholders (the “General Meeting ofShareholders”) scheduled to be held on March 26, 2021, as follows.
1. Background and purpose of this revision
While the continuation and partial revision of this system was approved in the 25th Regular General Meetingof Shareholders held March 26, 2020, as a result of the review and cancellation in July 2020 of the third
medium-term management plan “IDEAL to REAL 2022” announced December 2, 2019 (for more
information, please refer to “Notice on Review of the Third Medium-Term Management Plan ‘IDEAL toREAL 2022’ and Progressive Dividend Policy” news release of July 30, 2020), the content of this system
has been reviewed as well. The decision has been made to seek shareholder approval for partial revisionsof the system. A decision has also been made not to award points to eligible persons for the fiscal year
ended December 2020.
For previous discussions related to this system, please refer to Notice of Introduction of Performance-based
Stock Reward System, a news release announced February 13, 2015; Notice on Continuation and Partial
Revision of Performance-Based Stock Reward System, a news release announced January 30, 2020; and(Revised) Partial Amendment to the Notice on Continuation and Partial Revision of Performance-BasedStock Reward System, a news release announced March 13, 2020.
2. Details of revisions to this system
This system as it currently stands will be revised with respect to the following points, subject to approval at
the General Meeting of Shareholders.
(Main revisions from the current system)

-1-

Item

Before revision

After revision

System beneficiaries

Directors (excluding auditor directors,
external directors, and non-executivedirectors) of ES-CON JAPAN

Target period

Three fiscal years from the fiscal year
ending December 2020 until the fiscal
year ending December 2022 and eachsubsequent period of three fiscalyears
Consolidated operating income andtotal shareholder return (TSR) shall be
adopted as the calculation method
ES-CON JAPAN will assign points inaccordance with the status ofachievement of the goal on
consolidated operating income basedon the number of standard shares foreach position stipulated at thebeginning of the fiscal year in the third
medium-term management plan.
Annual points assigned to the subject
parties will be accumulated inperformance for the fiscal year ending
December 2022, the final fiscal year in
the third medium-term management
plan.
Upon the resignation of Directors(excluding auditor directors, external
directors, and non-executive directors)of ES-CON JAPANDirectors (excluding auditor directors,external directors, and non-executivedirectors) and (authorized) executive
managing officers of ES-CON JAPANThree fiscal years from the fiscal year
ending December 2021 until the fiscalyear ending December 2023 andeach subsequent period of threefiscal years.
ES-CON JAPAN will assign points inaccordance with the status ofachievement of the goal on
consolidated operating income basedon the number of standard shares foreach position stipulated at thebeginning of the fiscal year ending
December 2021. Annual points
assigned annually to the subject
parties will be accumulated in theperformance for the fiscal year ending
December 2023.

Calculation method
cap on number ofshares of to begranted to ES-CON
JAPAN’s directors

Granting of shares ofES-CON JAPAN toES-CON JAPAN’sdirectors

Upon the resignation from their posts(excluding auditor directors, external
directors, and non-executive
directors) and (authorized) executive
managing officers of ES-CON JAPAN3. Overview of the System after Revision (Underlined passages indicate revisions from the currentsystem.)(1) Overview of the System
The System is an incentive system in which ES-CON JAPAN contributes money to the Trust (theupper limit of which is as per (6) below), with the Trust acquiring shares of ES-CON JAPAN with theapplicable money as capital, and shares, etc. of ES-CON JAPAN being granted to ES-CON JAPAN’s
directors through the Trust in accordance with the performance achievement rate, etc.
Moreover, the shares, etc. will be granted to the directors (excluding auditor directors, externaldirectors, and non-executive directors) and (authorized) executive managing officers of ES-CON
JAPAN when the said director retires from the position of director.

-2-(2) System beneficiaries
Directors of ES-CON JAPAN (excluding auditor directors, external directors, and non-executivedirectors)(3) Target period
Three fiscal years from the fiscal year closing at the end of December 2021 until the fiscal year
closing at the end of December 2023 and each subsequent period of three fiscal years (“target period”
hereinafter for such period of three fiscal years) .
(4) Establishment of the trust associated with operation of the System
ES-CON JAPAN shall establish and operate the following trust for operating the System based on
mutual agreement with the trustee.
(1) Resolutions of general meeting of shareholders(4) Shares ofES-CON JAPAN(3) Change inthe trustagreement
and entrustmentof additionalmoney(4) Shares ofES-CON JAPAN

Stock Market(4) Payment of theprice[Trust settlor]
ES-CON JAPAN(2) Change in officer stockownership regulations[Beneficiaries]
ES-CON JAPAN’s Directors(6) Granting of shares, etc.
of ES-CON JAPAN[Trustee]
Resona Bank
(4) Payment of the price[Trust administrator](5) No exercise of voting rights(1) ES-CON JAPAN shall obtain a resolution for approval at the General Meeting ofShareholders concerning continuation and partial revision of the System.
(2) ES-CON JAPAN shall change officer stock ownership regulations within the scope
approved by the General Meeting of Shareholders.
(3) ES-CON JAPAN shall change the existing trust agreement and entrust additional
money within the scope approved by the General Meeting of Shareholders.
(4) The Trust shall acquire shares of ES-CON JAPAN through the stock market, etc. orby the method of underwriting ES-CON JAPAN’s disposal of treasury shares byusing money entrusted in (3) above.
(5) Voting rights shall not be exercised during the trust term with regard to shares of ESCON JAPAN under the Trust.
(6) During the trust term, the beneficiaries will be assigned points in accordance withthe position and the performance achievement rate of the beneficiaries based on thestipulations of the officer stock ownership regulations in (2) above. Shares, etc. ofES-CON JAPAN will be granted to directors who have fulfilled the beneficiary
requirements stipulated in the officer stock ownership regulations to a certain
degree, including when a director resigns, at the number in accordance with thenumber of points assigned.

-3-(5) Trust term
From April 1, 2015, to the closing of the Trust (No specific closing date is determined for the trust
term of the Trust and the Trust shall continue as long as the System continues. The System shallend due to delisting of shares of ES-CON JAPAN or abolishment, etc. of the officer stock
ownership regulations.)(6) Amount of money contributed to the Trust
ES-CON JAPAN will contribute money with an upper limit of 330 million yen (Note), calculated bymultiplying 110 million yen per fiscal year by the target period, to the Trust as funds for acquisitionof shares of ES-CON JAPAN to grant shares, etc. of ES-CON JAPAN to ES-CON JAPAN’s
directors, on the condition that approval is obtained at the General Meeting of Shareholders.
Moreover, after the expiration of the first target period and until the end of the System, ES-CON
JAPAN shall make additional contributions not exceeding the amount calculated by multiplying 110
million yen per fiscal year by the target period in each target period.
However, when making contributions or additional contributions, when there are residual company
shares (excluding items for which granting to ES-CON JAPAN’s directors has not been completedwith shares of ES-CON JAPAN in proportion to the number of points assigned to ES-CON
JAPAN’s directors in each target period) and money (hereinafter collectively referred to as“residual shares, etc. immediately before the start of the target period”), the total amount of theresidual shares, etc. immediately before the start of the target period and the amount of the trust
money which will be additionally contributed shall be within the range of the upper limit of the trust
money approved at the General Meeting of Shareholders.
(Note)The money to be allocated to trust expenses for the Trust and expenses for system operation such as trust fee
will not be included in 330 million yen, which is the upper limit of the funds for acquisition of shares of ES-CON
JAPAN mentioned above, and additional contribution of necessary money can be made.

(7) Calculation method and upper limit of number of shares to be granted to ES-CON JAPAN’s directors
After the continuation of the System, consolidated operating income and total shareholder return(TSR) shall be adopted as the method for calculating the number of shares of ES-CON JAPAN to
be granted to ES-CON JAPAN’s directors, with an aim to provide incentive for business execution
conscious of sustainable growth and setting as clear indicators from the viewpoint of shareholders
the return of profits to shareholders and enhancement of corporate value. Specifically, ES-CON
JAPAN will assign points (the “annually assigned points”) in accordance with the status ofachievement of the goal on consolidated operating income (the “performance-based coefficient (1)(*1)”) based on the number of standard shares for each position stipulated at the beginning of the
fiscal year in the fourth medium-term management plan, and the annually assigned points
assigned to the subject parties will be accumulated (the “cumulative assigned points during thetarget period”) in the performance for the fiscal year ending December 2023, the final fiscal year inthe third medium-term management plan. The obtained points (the “assigned points ultimatelydecided”) will be calculated by multiplying the cumulative assigned points during the target periodby the rate of deviation between ES-CON JAPAN’s TSR and the growth rate of the TSE First
Section Real Estate TOPIX (the “performance-based coefficient (2) (*2)”) during the period of thethird medium-term management plan. The points are converted at a rate of one company share forevery 10 points when granting shares. However, when a stock split, free stock allocation or reversestock split, etc. has been carried out with regards to the shares of ES-CON JAPAN after theapproval of this proposal, the conversion rate shall be adjusted appropriately in accordance withthe relevant rate, etc. The upper limit per fiscal year of the number of cumulative points assigned toES-CON JAPAN’s directors shall be 1,100,000 points (110,000 shares). The upper limit of thenumber of shares of ES-CON JAPAN acquired by the Trust in each target period is 3,300,000
points (330,000 shares), which is equivalent to the number calculated by multiplying the upper limitof the number of annually assigned points by three, the number of fiscal years during the target
period.

-4-(*1)(*2)

Performance-based coefficient (1) will be determined within the range between 0.0 and 1.5 in accordance with theachievement rate of the forecast operating income on a consolidated basis.
Performance-based coefficient (2) will be determined within the range between 0.5 and 1.0 by comparing ES-CON
JAPAN’s TSR with the TSE First Section Real Estate TOPIX during the target period and based on the rate ofdeviation between them.

(8) Method of acquisition of shares of ES-CON JAPAN by the Trust
The Trust shall acquire shares of ES-CON JAPAN through financial instrument exchange markets,etc. or by the method of underwriting ES-CON JAPAN’s disposal of treasury shares within theupper limit of the amount of money to be contributed in to the Trust in (6) and (7) above.
(9) Granting of shares of ES-CON JAPAN to ES-CON JAPAN’s directors
When the directors of ES-CON JAPAN fulfill beneficiary requirements, payment of money will also
be made as follows in addition to the granting of shares made previously.
Accordingly, shares of ES-CON JAPAN equivalent to 70% of the total number of points assigned
based on the System before the revision and the number of assigned points ultimately decided
assigned based on the System after the revision will be granted to ES-CON JAPAN’s directors. As
for shares of ES-CON JAPAN equivalent to 30% of the total points, the money equivalent to thefair market value of shares of ES-CON JAPAN will be granted instead of shares of ES-CON
JAPAN from the perspective of securing funds for tax payment. In addition, as for the total amountof shares of ES-CON JAPAN equivalent to the total number of points assigned based on theSystem before the revision and the number of assigned points ultimately decided assigned basedon the System after the revision, money equivalent to the fair market value of shares of ES-CON
JAPAN will be granted instead of shares of ES-CON JAPAN to the heir in the case the director ofES-CON JAPAN passes away during the trust term. Furthermore, the total amount of shares ofES-CON JAPAN equivalent to the total number of points assigned based on the System before therevision and the number of assigned points ultimately decided assigned based on the System after
the revision will be granted to directors who will retire at their own convenience.
(10) Exercise of voting right of shares of ES-CON JAPAN within the Trust
Voting rights pertaining to shares of ES-CON JAPAN within the Trust shall not be exercised
without any exception in order to secure independence of ES-CON JAPAN’s management from theTrust.
(11) Handling of dividends of shares of ES-CON JAPAN within the Trust
Dividends pertaining to shares of ES-CON JAPAN within the Trust shall be received by the Trust,and used for trust-related expenses such as acquisition of shares of ES-CON JAPAN and trust
fees, etc. Moreover, when the Trust closes, it is planned that the dividends remaining in the Trust
are to be granted to beneficiaries of the System who are in office at that point in time byproportionally dividing the dividends in accordance with the accumulated points of each individual
or donated to public interest corporations.
(12) Handling at the closing of the Trust
The Trust shall be closed in the event the shares of ES-CON JAPAN are delisted or the officer
stock ownership regulations are abolished, etc.
Of the residual assets of the Trust when it is closed (excluding shares planned to be granted todirectors in office at the time of the closing of the Trust with the possibility of fulfilling thebeneficiary requirements), shares of ES-CON JAPAN shall be cancelled or donated to public
interest corporations based on a resolution of the board of directors, after all of the shares of ESCON JAPAN having been acquired by ES-CON JAPAN at no cost. Of the residual assets of theTrust when it is closed, money shall be paid to the beneficiaries of the System who are in office atthat point in time by proportionally dividing the money in accordance with the accumulated points ofeach individual or donated to public interest corporations.

-5-[Reference]<Content of trust agreement>
1. Name:Board benefit trust for executives
2. Entrusting party:
ES-CON JAPAN3. Trustee:Resona Bank, Limited
4. Beneficiaries:
Directors (excluding outside directors, auditors and non-executive directors) who
fulfill the prescribed requirements
5. Trust administrator: Third party having no interest in ES-CON JAPAN6. Date of conclusion of trust agreement: April 1, 2015 (an amendment agreement is scheduled to beconcluded in May 2020)
7. Trust term:
From April 1, 2015, to the closing of the Trust-6-